Author Question: Pat, a Pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens ... (Read 78 times)

fbq8i · **on:** Mar 6, 2021

Question 1

Overhead costs allocated to the sales office and individual customers are always relevant when deciding whether to drop a customer.
◦ true
◦ false

Question 2

Pat, a Pizzeria manager, replaced the convection oven just six months ago. Today, Turbo Ovens Manufacturing announced the availability of a new convection oven that cooks more quickly with lower operating expenses. Pat is considering the purchase of this faster, lower-operating cost convection oven to replace the existing one they recently purchased. Selected information about the two ovens is given below:

Existing

New Turbo Oven

Original cost

$60,000

$50,000

Accumulated depreciation

$ 5,000

-

Current salvage value

$40,000

-

Remaining life

5 years

Annual operating expenses

$10,000

$ 7,500

Disposal value in 5 years

$ 0

Required:
a. What costs are sunk?
b. What costs are relevant?
c. What are the net cash flows over the next 5 years assuming the Pizzeria purchases the new convection oven?
d. What other items should Pat, as manager of the Pizzeria, consider when making this decision?

chem1s3 · **Reply #1 on:** Mar 6, 2021

A FREE account is required to view all solutions!

Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.

Answer Preview

Only 58% of students answer this correctly